First Data, Cequel Seek Lower Rates as Yields Tumble to New LowsSridhar Natarajan
First Data Corp., the credit-card processor owned by KKR & Co., and U.S. cable operator Cequel Communications LLC were among companies tapping the loan market to reduce interest rates as increasing demand for the debt pushes yields to the lowest level on record.
First Data is seeking to lower the rate on $2.67 billion of loans, according to a person with knowledge of the matter. The company is seeking to pay interest at 4 percentage points more than the London interbank offered rate with no minimum on the lending benchmark, compared with 5 percentage points more than Libor that it currently pays, said the person, who asked not to be identified because the deal is private.
Cequel wants to amend its $2.7 billion credit pact by cutting 25 basis points from the margin on its term loan and the minimum on the Libor, the company said in a statement today. A basis point is 0.01 percentage point.
The average yield of 5.74 percent on speculative loans made to U.S. borrowers is the lowest on record in data going back to 2007 with the measure falling for seven straight days, according to JPMorgan Chase & Co. Issuance of $271 billion in the first quarter was the most on record, according to data compiled by Bloomberg.
Snam SpA, the owner of Italy’s biggest natural-gas network, is seeking to lower the interest rate on 5 billion euros ($6.4 billion) of loans it raised last year, according to three people with knowledge of the matter.
The British Bankers’ Association, the lobby group that oversees Libor, said it will delay publishing banks’ individual submissions by three months in an effort to restore confidence in the benchmark rate.
Individual entries of the lenders that contribute to Libor each day in different currencies and maturities will no longer be made available on the same day from July 1, the London-based BBA said in a statement today.
Dynegy Inc., the U.S. independent power producer that exited from bankruptcy protection last year, set the rate it will pay on $1.8 billion of covenant-light loans to refinance debt, according to a person with knowledge of the matter.
A lender meeting has been arranged for 11 a.m. on April 3 for a potential refinancing of Wendy’s International Inc. debt, said a person with knowledge of the matter. Equinox Holdings Inc. plans to meet with lenders at 2 p.m. on the same day, said another person.
Leveraged loans are a type of junk-grade debt rated less than Baa3 by Moody’s Investors Service and below BBB- by S&P.